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"They seem to be targeting fresh debt with an enthusiasm that's quite something to be believed."

Craig Macalister, director of tax for the New Zealand Institute of Chartered Accountants, said that in the Wellington High Court on Monday several applications to liquidate had to be stood down just so the lawyers could talk to IRD.

NZICA was concerned that the department was either not talking to tax agents or that statutory demands were arriving when negotiations were still going on.

The taxman seemed more determined to bring matters to a conclusion, he said.

He knew of one taxpayer who was paying $1000 a month more than his tax obligations, and yet the department still wanted to bankrupt him. "In some of these cases IRD aren't going to get a red cent out of it all. A lot of small businesses are running on the smell of an oily rag."

He conceded that the department had "probably got to the end of their tether" with some firms. However, IRD's obligation was to maximise the revenue for the government over time.

"I'm not convinced that running round liquidating a whole lot of people, or making people bankrupt, is actually doing that."

At the start of the downturn, IRD had committed to taking a pragmatic approach towards firms in difficulty, and tax agents had reported that it was good to deal with, Macalister said.

NZICA had negotiated a fast-track approach, whereby accountants could get instalment arrangements for their clients agreed upfront. But many members had found they didn't even need to use it.

IRD was insisting nothing had changed, he said. "If nothing's changed then why am I all of a sudden getting flooded by emails from our members saying they're finding IRD being unreasonable?"

Martin Scott, group manager, assurance for IRD said it continued to work with businesses in trouble on a case-by-case basis.

"We know some businesses are struggling and we have been urging them to talk to us early so we can discuss options to help them meet their obligations."

When a taxpayer got into serious debt, IRD took a range of steps to try to help them get back on track, he said.

"Where that is not possible we are required to address the situation. We cannot knowingly allow a continuation of activity if the business is in an insolvent state."

IRD reviewed cases regularly where it took legal proceedings to ensure it was acting appropriately, and legal action was a last resort, he said.

West Auckland builder Ian Riggans tries to let his accountant deal with his tax affairs.

So he was surprised to receive a series of phone calls from the Inland Revenue Department wanting to know when he was going to pay his tax bill. "This is the first time they've actually rung me direct."

Then a letter arrived giving him seven days to pay $6500, or else. This was the first written correspondence he'd had.

He has almost as much due to him in family assistance so the bill would have been cancelled out, but "I don't think that's the way they see it".